Trends, challenges, and opportunities for ESG in the food and drinks industry

Trends, challenges, and opportunities for ESG in the food and drinks industry


Feb 22, 2023

Blog Environment , Food and Beverage Trends, challenges, and opportunities for ESG in the food and drinks industry

ESG is on track to be the buzzword of 2023, with almost every industry recalibrating its practices to become compliant with Environmental, Social, and Governance (ESG) framework. At this year’s AUTM event, the BCC Research team is on the show floor discussing the impact of sustainability on numerous industries. Within the food and beverages sector, the looming climate crisis is the primary driver of this intense scrutiny of business practice, and it’s becoming clear that consumers and employees alike won’t tolerate shady and half-hearted sustainability policies. With the food and drinks industry being one of the biggest in the world, ESG practices in this sector are edging further into the spotlight.

With the food and beverage industry expected to grow, the focus on ESG will only increase. BCC Research anticipates the market for food and beverages to rise at a CAGR of 8.7%, reaching heights of $9 trillion by 2026. 

Key trends in the food and beverages industry

There’s a snowstorm of factors making the food and beverages industry increasingly complex. Rising populations, ever-growing environmental concerns, and economic headwinds are causing significant shifts in the industry. These factors are fostering the development of some significant industry trends:

  • Plant-based food: The industry is only now feeling the full impact of the plant-based revolution. New products made from plant-based proteins have flooded supermarket shelves in recent years, altering the industry significantly. All of these goods require novel processing methods and supply systems, which has driven further investment in this space.
  • Digital food revolution: Supply chains are more data-rich than ever. Food corporations are increasingly considering the idea of a “digital-first” approach for some markets, changing the face of business operations for good.
  • Growth of convenient food: In the modern day, people’s lives are busier than ever. Consumers have less time to dedicate to preparing meals from scratch, hence the rise of convenient food. Quality, easy foods are in high demand, with goods ranging from bagged salads to rotisserie chickens becoming major growth categories.

Challenges ahead for the food and beverage industry

It’s a challenging time for industries the world over, and the food and beverages industry is no different. As well as global circumstances creating novel business challenges, the manufacturing and selling of food and drinks has its own unique difficulties. The core challenges identified by BCC Research are:

  • The risk of food spoilage: Food and drinks can spoil easily if not stored correctly and transported in the appropriate timeframes. Businesses must adhere to precise deadlines, arrange for specialized storage and transportation, and maintain strict inventory management. This also indicates that downtime for processing and packaging industries may be costly.
  • Strict hygiene standards: Food and drink demands clean and careful handling. This encompasses anything from stringent cleaning standards to strict allergy restrictions. A grease leak that would only require extra cleaning in other industries might damage food and beverage goods, which can result in wastage and extra costs for processing firms.
  • A preference for price-sensitive items: Specialized food and beverage goods may command significant price premiums above mass-produced brands, and this business is widely regarded as highly competitive. Few categories contain “business secrets,” and food and beverage firms acquire and defend market share by relying on customer reputation and pricing.
  • Inherently small profit margins: It’s a profitable industry in some respects, but food and beverages have notoriously small profit margins. This is due to a strong competitive economy in which large merchants and discounters wield considerable negotiating power.
  • Shakey supply chains: The unreliability of food supply chains creates insecurity for food businesses. Price volatility, disease outbreaks, and unexpected weather events mean that supply can fluctuate between seasons and years. Such concerns can result in an instant decrease in firm profitability.
  • Consumers seek greater openness: In today’s world, the environment comes first. Consumers wield significant power over markets, which means food and beverage firms must be open about their ingredients, manufacturing tendencies, and supplier networks to gain public trust.

Global Food and Beverage Industry Opportunities

Challenges exist within the food and beverage industry, this much is true. But despite obstacles, opportunities remain, prompted in part by a wider drive for businesses to become ESG compliant.  

  • Implementing the use of bio-degradable alternatives: Consumers have triggered a revolution in the food and beverage sector. People are approaching purchases with an environmentally savvy mindset, often choosing bio-degradable packaging over single-use plastics. This is helping businesses that are intentionally working to reduce their carbon footprints become more environmentally friendly.
  • Plant-based meat products surging: Consumers in their masses shifted to plant-based diets during the Covid-19 pandemic. A mix of environmental, ethical, and health concerns were the key motivator of this migration, and as a result, food producers are focusing heavily on providing plant-based alternatives. 
  • Keeping the value chain transparent: IoT, AI, and blockchain technology have helped food manufacturers maintain precise data records. With the world on the cusp of the AI era, this trend will only continue. The result will be better supply chain analysis, such as tracking ingredients, weight management and temperature monitoring.
  • Food recall prevention: Food producers are conducting vulnerability assessments to help prevent the need for food recalls. A daily or weekly accuracy testing schedule should be maintained to help detect microbial problems in meals. Visual and mechanical inspection systems should also be put into place to help spot foreign bodies like glass, plastic, or metal in food.
  • Businesses should seek expert advice: Despite challenges, the food and beverage sector is still a relatively profitable field in which to start a business. Seeking the advice of experts can help greater equip businesses to navigate the regulations and requirements of food and drink manufacturing. Through experience and analytics, these specialists understand the complexities and undercurrents of the sector, and they can provide definitive solutions to common difficulties.

To discover more about the global impact of sustainability, sign up to receive BCC Research’s megatrends report here.

Learn about ESG within the food and beverages industry

Gaining access to reliable and clear ESG guidance is essential for any business navigating the food and drinks sector. BCC Research’s latest report provides straightforward and actionable advice on the tricky world of ESG compliance. Download your complimentary report overview now, or enquire about purchasing the report here.

Alternatively, memberships with the BCC Research library offer access to the full catalog of reports within the environmental sector. Get in touch below to discover the full benefits of membership.

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    Olivia Lowden

    Written By Olivia Lowden

    Olivia Lowden is a Junior Copywriter at BCC Research, writing content on everything from sustainability to fintech. Before beginning at BCC Research, she received a First-Class Master’s Degree in Creative Writing from the University of East Anglia.

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